FCC Rules in Favor of Verizon, Baby Bells ; They Need Not Share Fiber Optic Networks

Verizon and other Baby Bells won’t have to share new fiber optic broadband networks with rivals, federal regulators ruled Thursday.

The decision is a victory for the Baby Bells, most of which have moved cautiously in deploying super-high-speed fiber networks. Fiber is capable of delivering voice, Internet and television service at speeds many times faster than DSL or cable modem service.

Rival companies, which were hoping to lease the new fiber connections for resale to business and residential customers, criticized Thursday’s 4-1 decision by the Federal Communications Commission.

But FCC Chairman Michael Powell said in a statement that the ruling will spur investment and competition. “By limiting the … obligations of [Baby Bells] when they roll out deep fiber networks to residential consumers, we restore the marketplace incentives of carriers to invest in new networks,” he said.

The lone dissenter, FCC Commissioner Michael J. Copps, said the decision will restrict, not encourage, competition for consumers. “By shutting off the last mile to competitors, the commission is not ushering in a new era of broadband. It is returning to the failed and non-competitive policies of the past,” said Copps.

The Association for Local Telecommunications Services – which represents many smaller phone and Internet service providers that lease existing Bell networks – said “Thanks to the FCC’s action today, the Bells can now deny competitive carriers access to local … facilities that contain any fiber – including part-fiber, part- copper loops that were deployed decades ago.”

The Baby Bell phone companies are feeling pressure from cable operators that sell high-speed Internet service and TV and are rapidly rolling out telephone services.

To compete, Verizon and others are looking for ways to offer consumers that same so-called triple play of voice, Internet and TV. A fiber optic network would give the phone companies a wire into consumer’s homes with enormous capacity to deliver all three services.

Some industry observers are skeptical that the phone companies will ever build a fiber optic network that reaches every home, primarily because the installation cost per subscriber is so high (some estimate $1,000 per home) and there are doubts about what consumers might be willing to pay each month for services.

Verizon, the most aggressive of the Baby Bells so far when it comes to building new fiber networks, has promised to spend $800 million by the end of this year to make fiber service available to 1 million homes. The company plans to reach 3 million homes with the new technology by the end of next year.

“It’s helpful to have the FCC make progress on developing a national policy of hands-off the economics of broadband,” said Verizon spokesman Larry Plumb.

The company announced this year it would be deploying high-speed fiber in Bergen County. Earlier this year, Verizon started offering Internet service over a fiber network in Keller, Texas. Verizon has about 54 million local phone lines nationwide.

SBC Communications said Thursday that the FCC’s decision means it will speed up its fiber deployment to reach 18 million homes in two to three years, rather than five years, as previously announced. The company plans to spend $4 billion to $6 billion on the project.

Independent telecommunications analyst Jeff Kagan said that only time will tell which network – cable, DSL, wireless, or fiber – will become the dominant standard, but he praised the FCC for removing regulatory hurdles that the network builders face.

“The U.S.A. is typically ahead of the technology curve, but with broadband we are behind the world. This is good news for that build out,” Kagan said.

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E-mail: mckay@northjersey.com